The Pharmaceutical
Journal Vol 267 No 7177 p810-811
8 December 2001
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The Pharmaceutical
Journal Vol 267 No 7177 p810-811 |
Gazing into a crystal ball: funding the National Health Service in the future |
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Predicting the future of something as large as the National Health Service is always going to be difficult. Jonathan Buisson (on the staff of The Journal) looks at a new Treasury report to see what might happen and what it might cost |
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Since the inception of the National Health Service in 1948, the vast majority of health care funding in the United Kingdom has been provided from general taxation. The result has been a health service to which the public has a great attachment. However, the UK has fallen behind equivalent countries in terms of both money invested and health outcomes seen. Considerably more investment will be needed over the next 20 years if the UK is to catch up with its peers and maintain the high-quality service that the public increasingly wants. These are the main conclusions of "Securing our future health: taking a long-term view", an interim report on the funding of the NHS over the next 20 years. The report was compiled for the Treasury by Derek Wanless, a former chief executive of NatWest Bank. It was published on 27 November alongside the Chancellor of the Exchequer’s pre-budget report. Mr Wanless says that although the costs and work of the NHS have been subject to numerous investigations in the past, his report is the first since 1948 to attempt to look seriously at how trends in health care may affect the funding needed. Underspend Looking at the NHS as it currently stands, the report notes that the UK spends less on health care (as a proportion of gross domestic product) than countries similar in economic terms — France, Germany, the Netherlands, Sweden, Canada, New Zealand and Australia. This has been the case for at least 30 years and in some cases, such as France, the gap is widening. Since 1972, there has been a cumulative underspend of £267bn in the UK measured against the European average spend. The Prime Minister (Tony Blair) has said that he wants to bring UK spending up to the European average level, although he qualified this as a broad aim rather than a specific pledge. Matthew Young, director of special projects at think-tank the Adam Smith Institute, says that he will have a hard job doing so: "Looking at the basic arithmetic, the figures are ominous. The weighted European Union average spend on health care in 2001 is about 9.7 per cent of GDP and growing in real terms by 1–2 per cent a year. "The UK spend in 2001 is about half the income tax take at £55bn or 6 per cent of GDP. The 2000 budget increased that by about 6 per cent a year to 2004 when we will be spending £66bn or 7.7 per cent of GDP. "Meanwhile, because health spending in Europe is still growing, Europe will be at about 10.2 per cent by then. Thus in 2004 we will still have a £20bn funding shortfall compared with Europe, equivalent to another 6p in the pound on income tax." Alissa Goodman, senior economist at the Institute of Fiscal Studies, says that £20bn is one of many different estimates — the shortfall could be lower — depending on how European average spending is defined (whether it includes the UK, for example) and what happens in the future. "Putting this in context, the total UK tax income is in the region of £400bn, so to find an extra £20bn a 5 per cent total increase would be needed," she says. Health outcomes The consequences of the spending shortfall can be seen. "Health outcomes in the UK are generally poor in comparison with these seven countries. The outcomes for women are relatively worse than for men," the Wanless report says. For example, women in the UK have a shorter life expectancy at birth and at age 65 years than in any of the seven comparator countries. So where do we go from here? Mr Wanless is in favour of retaining the current tax-funded system, saying: "My conclusion is that there is no evidence that any alternative financing method to the UK’s would deliver a given quality of health care at a lower cost to the economy." However, he was subsequently quoted in newspaper reports as saying that he was not ruling out alternative systems. The Adam Smith Institute believes that radical reform of the way the NHS is funded is needed if any increase in funding is to produce noticeable effects. Matthew Young says: "Putting more money into the NHS without reform will represent a total waste: it will be absorbed by systematic NHS inefficiencies." He believes that the NHS will have to move towards a system similar to those in Europe, with greater co-payments by patients and insurance-based top-up funding. The future cost of the health service will depend on the kind of health care the public wants to receive (and is willing to pay for) and the medical needs that the health service is able to meet. Both of these are difficult to quantify. The Wanless report says that in the future the public will expect the health service to provide:
Bringing up the physical quality of premises from which NHS services are provided is likely to be expensive, with an estimated £3bn backlog of repairs, particularly if they are judged against the standard of other public spaces, such as shopping malls. The public tends to see the NHS as a monolithic whole, but in reality it is a fragmented collection of departments, practices and professionals. Providing a more joined up service will mean more sharing of information and, probably, more information technology. NHS spending on IT is low by international standards and will probably need to rise, but the Government has had a poor record in the past of commissioning and implementing complex computer systems that actually work. Meeting medical needs Medical needs in the future will depend both on the health (and age profile) of the population and the technology (including pharmaceuticals) available to diagnose and treat patients. Although the population is both ageing and increasing, this may not raise health costs as much as has been supposed, the Wanless report says. Most money is still spent on people in their first year after birth and in the year before their death. An ageing population may postpone rather than increase health service costs. Conversely, chronically ill people may live longer thus needing more treatment and costing more. The NHS has been characterised as a "late and slow" adopter of new medical technology, in that it does not start to use new products quickly and their spread into generally accepted practice is often slow and patchy. National service frameworks are one way in which the Government is addressing this, but national standards for high-quality care come at a price. The NSF for Coronary Heart Disease, for example, recommends increased use of appropriate drugs, including angiotensin-converting-enzyme inhibitors, beta-blockers, aspirin and statins. If the NSF is implemented in full, the Wanless report estimates that the bill for statins could reach £2bn by 2010 with around one-third of the population over 45 years of age receiving them (PJ, 24 November 2001, p740), although patent expiries and competition may bring this cost down. In cancer, an extra £1bn a year might be needed for screening, treatment and equipment by 2006 and, in diabetes, an extra £750m to implement the NSF. Further costs can be expected. The report says: "The NSFs specify modest goals in terms of treatment thresholds and do not anticipate how best practice is likely to evolve over the next 20 years. They are primarily a means of disseminating current best practice over a 10-year period and do not take into account technological advances and future patient expectations." In terms of new pharmaceuticals, the picture is clouded by uncertainty over what impact greater understanding of the genetic basis of diseases will have. Since the medicines to be introduced over the next 10 years are already in or about to enter clinical development, no major changes are expected soon. However, pharmacogenomics may mean that either fewer patients are treated — but with a much greater chance of being treated successfully — or that an even greater variety of diseases can be diagnosed and treated than at present. The Wanless report found expert opinion to be divided on this matter. Increased use of new technologies and medicines is likely to be driven by the fact that the UK lags behind other countries and has some catching up to do and by increased public awareness of medicines that are potentially available. Greater use of the internet or direct-to-consumer advertising of prescription medicines could exacerbate this demand. Paying the bill Where will all the new money come from to pay for the new European-style NHS? The Wanless report does not give any estimates, saying that it would be premature to do so. The full report in April next year is expected to have more details. The two main sources of funding are either general taxation or increased patient contributions. The level of funding required even to draw level with the rest of Europe implies that if the Government is to fund this taxes would have to rise. Increases in the headline rates of income tax or VAT seem unlikely as they would translate into the wrong sort of headlines — ones that might frighten voters. A specific NHS tax has been mooted by some commentators but this does not seemed to have found favour with the Treasury, which is generally against hypothecated or directly linked tax and spending. Such a tax would link the NHS more closely to the economic cycle causing problems if income fell during a recession. National Insurance could be a target for raising more money. This is already loosely linked in the public mind with the NHS. According to the Treasury’s own calculations, increasing both employee and employer NI rates by 1 per cent would raise £6.75bn and removing the upper earnings limit would raise more. Renaming National Insurance Contributions "NHS Contributions", or something similar, might make this approach more palatable. The other approach is to make users of the NHS pay more directly for the services they receive, either through direct charges or through social insurance or private medical insurance schemes. These are used to a much greater extent in most of the comparator countries examined in the Wanless report. In the United Kingdom private spending and insurance account for only 17 per cent of health funding, compared with 24 per cent in Germany and 30 per cent in Australia. One obvious area for increased patient contributions could be in prescription charges or patient co-payments for medicines. At present prescription charges in the UK raise just over £400m, about half the net ingredient cost of prescriptions for which charges are payable. More than 80 per cent of prescriptions, worth almost £4bn, are dispensed without charge to the patient. As The Journal reported recently (24 November, p741) wasteful prescribing, including medicines collected but never used by patients, accounts for between 10 and 20 per cent of the NHS prescribing budget. Forcing patients to pay a contribution towards the actual cost of their medicines might be one way of reducing this wastage. Patients could be made to pay either a flat fee for all items dispensed or to pay a proportion of the cost of the medicine. Alternatively, patients could have to pay if they want to receive a particular branded medicine rather than a generic equivalent. These payments might be covered by insurance schemes as they are in some European countries. Mr Wanless suggests in his report that patients might have to pay for non-clinical aspects of hospital treatments, such as private rooms and better food. This has been likened to travelling first class on the train — everyone arrives at the destination at the same time, but some people pay more to do so in comfort. However, this is unlikely to raise much income above that needed to provide the extra services in the first place, and many of the additional services may be provided by private companies at a profit. Pay peanuts … A succinct summary of the Wanless report is that for many years the UK has paid peanuts for its National Health Service and as a result has got monkeys. If taxpayers really want a better NHS, they will have to put their hands in their pockets and pay appropriately for it.
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